Partnership strategy a core element of Etihad growth, says group president and CEO

Abu Dhabi, UNITED ARAB EMIRATES – Etihad Aviation Group’s partnership strategy has been a core element of the growth of the business, said President and Chief Executive Officer James Hogan in a speech today.

Delivering
a keynote at the 19th Annual Global Airfinance Conference in Dublin, Mr Hogan
said the strategy, which resulted in 5.5 million guests connecting onto the
Etihad Airways network from codeshares and partners in 2016, had delivered
revenue and synergy benefits.

“Our
investments had an immediate impact on the revenue side, delivering hundreds of
millions of dollars in additional revenues and allowing us to fill our onward
connecting flights. Those benefits have
been replicated in all our minority investments – in airberlin, Alitalia, Jet
Airways, Virgin Australia, Air Serbia, Air Seychelles and Etihad Regional.

“We
also believed our minority investments would unlock an additional advantage
that the global alliances were simply unable to use. Because we had ’skin in the game’, we could
work on joint procurement and other business synergies which would save us –
and our partners - hundreds of millions of dollars. Again, we have seen similar
benefits from each of our investments, with those synergies being shared by all
the partners.”

Mr
Hogan said the third goal of the equity investments, to allow the management of
these airlines to reshape their businesses into sustainable profitable
operations, required a longer term view.

“Of
course, their business strategies remained in the hands of the local management
in each case. We are pleased to support
management, and to advise where requested, but the plans and implementation are
in their hands.

“In
this third area, we have had some strong results but we also face some
significant challenges. Jet Airways, Air
Serbia, Air Seychelles, Virgin Australia and Etihad Regional have all used our
capital investments to help structure their businesses into more efficient and
profitable operations. In those cases, our long term investments are already
delivering a return.

“However,
we have faced greater challenges with airberlin and with Alitalia. Both are operating in very tough competitive
environments, and need to address long-standing issues facing their businesses.

“I
believe airberlin’s strategy is now on track and Alitalia is finalising a
business plan to address its issues.

“We
are committed to our equity partner strategy – it delivers a huge amount to our
business. Some of those airlines need to
react to the market pressures they face, and we are supportive of that process.

“That
approach has helped Etihad grow from a $300 million a year airline, to a
diversified aviation group which delivers revenues of more than $26 billion.
Etihad Airways sits at the heart of that business, of course, but is now only
one element of a model which includes significant other businesses and
investments.

“That evolution has not happened by accident.
Etihad Aviation Group is now a solid, diversified business with strength in
depth – and with the scale to shape its destiny in the future.”